How to hire in China through an EOR

China requires written employment contracts for full-time hires. You need to sign one within one month of the employee's start date, or you'll owe double their salary until you do. Go a full year without a contract and it automatically becomes open-ended, which is a much harder position to unwind.

Contract types

Most companies start with fixed-term contracts. They're standard for new hires and give you flexibility to assess fit before committing long-term. Just know that after two consecutive fixed-term contracts, you must offer an open-ended contract if you want to renew, or part ways.

Open-ended contracts tend to come into play for tenured or senior staff. Fixed-term is the default for most initial hires because it gives you room to evaluate the relationship before anything becomes permanent.

What has to be in the contract

Full-time contracts must be in writing and in simplified Chinese. If you include an English version, the Chinese text takes precedence in a dispute. Also worth noting: provinces vary on minimum wages and other requirements, so you'll need to match local rules, not just national ones.

The law requires these basics:

• Parties' names, addresses, IDs
• Term type and length
• Job duties and location
• Work hours, rest, leave
• Pay, including overtime and bonuses
• Social insurance
• Safety conditions
• Termination rules
• Probation if applicable

Probation periods max out at one month for contracts under a year, and up to six months for contracts of three-plus years. During probation, you must pay at least 80% of the full contracted salary. You can only put an employee through one probation period, ever.

Contractor vs. employee

Misclassification is one of the more costly mistakes companies make in China. Courts look at the reality of the relationship, not just what the contract says. If you set the hours, provide the tools, or supervise day-to-day work, it's likely employment regardless of the label.

If you're found to have misclassified someone, you could face back pay for benefits, double salary for any period without a proper contract, severance, and fines of up to 50,000 RMB per violation. Employees can also sue for reclassification and damages. Tax authorities can come after you for unpaid social contributions plus penalties on top.

Non-competes are enforceable in China, but only if they're limited to 2 years, tied to genuine confidential information, and compensated, usually at 30-50% of salary. Courts will throw out overly broad ones. On IP: employees own their inventions by default unless your contract says otherwise, so get assignment clauses in writing before anyone starts.

For new hires, fixed-term contracts are the practical starting point. Make sure your contracts are localized to the right province. And if you don't have a legal entity in China, an EOR can help you hire compliantly without running into misclassification issues.

China's Spring Festival gives employees nine days off in 2026. That's the longest break on the calendar, and it reflects how time off here combines generous public holidays with annual leave that grows over time.

Time off

Employees get 5 to 15 days of paid annual leave, depending on years of service: 5 days after 1 year, 10 days after 10 years, and 15 days after 20 years. Leave accrues at the start of each year based on tenure. Unused days carry over or get paid out at 300% of daily wage if not taken.

There are 13 statutory public holidays, often stretched into longer breaks with adjusted workdays. Here's the 2026 schedule.

Factor in make-up workdays like February 14 and May 9. These shift weekends to weekdays so longer holiday breaks stay balanced.

All leave types

Chinese law sets clear rules on paid leave, and job protection applies throughout. You can't terminate someone for taking legally entitled leave. Pay defaults to 100% unless noted below.

Sick pay starts at 100% for the first three months, drops to 80% for months 4-6, then 60%. Maternity leave includes 15 extra days for multiples.

Mandatory benefits

You're required to contribute to five social insurance programs: pension, medical, unemployment, work injury, and maternity. Rates vary by city. In Shanghai, the total employer share runs 20-30%. Employees contribute around 10-11%.

A housing provident fund is also required in most cities. Both employer and employee contribute, typically 5-12% each.

There are no mandated meal vouchers or transport allowances, but high-cost cities like Beijing often expect the housing fund to reach 12% per side. Shanghai caps contributions at three times the average local wage, so it's worth checking the local rules wherever you're hiring.

What people actually expect

If you're hiring in tech or finance, legal minimums won't get you far. Candidates in those sectors typically expect 15-20 days of annual leave from day one, regardless of tenure. Offering less will cost you candidates.

Private health insurance matters too. State coverage has real gaps, so most employees want international plans that cover their family. A 13th month payment is also standard practice in white-collar roles.

Remote work stipends of 500-1,000 RMB/month are common for home office costs. Meal allowances (20-50 RMB/day) and transport subsidies (300-500 RMB/month) come up regularly. In Shanghai, leading employers often add a housing allowance of 5-10%.

If you stick to the legal floor, you'll likely attract junior candidates only. Bumping annual leave to 15 days, adding private medical cover, and including a 13th month gives you a realistic shot at competing for experienced hires.

Terminating employees in China is one of the harder parts of operating there. The law leans heavily toward employees, and if you don't have a valid legal reason, you're looking at double severance as a penalty.

Firing someone

You can terminate immediately, without notice or severance, for serious misconduct. That covers criminal acts, major policy violations, fraud during hiring, or a second job that harms your business.

For anything else, you'll need to give 30 days' notice or pay an extra month's salary in lieu. Valid grounds include: the employee can't do the job even after training or reassignment, illness or injury makes work impossible, or significant changes to business conditions make the contract unworkable. Courts have recently confirmed that AI replacing a role doesn't qualify as such a change. You'd need to try retraining or reassigning the person first.

Without valid grounds, you're looking at unfair dismissal. That means double severance, and potentially reinstatement. Some employees can't be dismissed at all: pregnant women, those on maternity or breastfeeding leave, workers recovering from a workplace injury, and staff with 15 or more years of tenure who are within five years of retirement.

China's employment framework is built to protect long-term employees. After two fixed-term contracts or 10 years of service, you're required to offer an indefinite contract, which makes future terminations importantly harder. From 2025, Shanghai follows national rules on this, so there are no longer any local exceptions to work around.

Notice periods

Notice requirements depend on tenure and who's ending the contract. Employers face stricter rules in most situations.

Employees give 30 days' notice unless you're at fault, for example by not paying wages. Contract expiry doesn't always require a full 30 days' notice, but Beijing and Jilin both require 30 days' written warning, and skipping it can trigger penalties.

Severance

Severance applies to most employer-initiated terminations, including contract expiry, business changes, and incompetence. The formula is one month's salary per year worked, using whichever is higher: current pay or the average over the past 12 months.

Partial years count if they're six months or more, which rounds up to a full year. There's no severance for misconduct dismissals or if the employee resigns without cause. If someone earns more than three times the local average salary, service is capped at 12 years and pay is calculated at three times that average.

Unlawful termination doubles the amount owed. Payment should be made in a lump sum. Beijing has specifically flagged contract clauses that delay payment as a compliance risk.

Work permits and visas

You can hire foreign nationals through an EOR in China, but it comes with real complexity. Foreign workers with valid permits fall under Chinese labor law, and there are no carve-outs for foreign employers.

The main categories: Z visa for long-term work (over 90 days), which converts to a residence permit. M visa for short business trips. S visa for dependents of Z visa holders. There's no digital nomad visa.

The EOR or your local entity sponsors the permit. The process involves getting a work permit from the Ministry of Human Resources and Social Security, then a visa from the Public Security Bureau. You'll need a job offer, health check, clean criminal record, a bachelor's degree or equivalent, and at least two years of relevant experience. Processing typically takes one to three months.

Permanent residents are entitled to full labor protections. Non-compliance can result in fines or deportation orders, so this isn't an area to cut corners.

A few other things worth knowing

China's data protection law, the PIPL, requires employee consent before handling personal data. If there's a breach, you need to report it quickly. Penalties can reach 50 million RMB or 5% of annual revenue.

Trade unions are common and often state-linked. They tend to focus on employee welfare rather than industrial action. Collective agreements can set better terms than the statutory minimums, but they can't go below them.

A few recent developments to keep track of: 2025 Supreme Court rulings confirm that a labor relationship can exist even without a written contract, and you'll owe double wages if you didn't sign one. Shanghai's indefinite contract rules now match national standards. 2024 Jilin rules increased notice-related risks. AI-related layoffs require a strict process. Watch 2026 for further changes around older workers and retirement age adjustments.

Start with a written contract and document performance issues as they happen. If you're using an EOR, make sure they have real experience with local arbitration, not just a general knowledge of Chinese law. Gaps in process tend to show up at the worst possible moment, usually in a dispute.